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STATE OF CALIFORNIA EDMUND G. BROWN JR., Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

August 9, 2011 Draft Resolution W-4885

Agenda ID #10613

TO: All Interested Persons

The Division of Water and Audits is circulating draft Resolution W-4885. A previous draft resolution had denied without prejudice the request at hand. This draft authorizes San Jose Water Company's (SJWC) request in AL 415-A to amortize its Mandatory Conservation Revenue Adjustment Memorandum Account (MCRAMA). However, recovery of the balances in the MCRAMA under the request in AL 415-A would supplement, for the period August 3, 2009 through May 1, 2010, the recovery authorized under SJWC's Monterey-style Water Revenue Adjustment Mechanism (WRAM) and essentially provide to SJWC the recovery the utility would have achieved if the Commission had authorized a full decoupling Water Revenue Adjustment Mechanism/Modified Cost Balancing Account (WRAM/MCBA) rate-making mechanism for SJWC during this period in its most recent conservation case (D.08-08-030). Because the recovery authorized here will result in a modification to D.08-08-030, parties to D.08-08-030 are being provided notice and an opportunity to be heard on this issue as is required by Public Utilities Code Section 1708.

The Commission may act then on this resolution or it may postpone action until later. When the Commission acts on a draft resolution, the Commission may adopt all or part of the draft resolution, as written, or amend or modify the draft resolution; or the Commission may set the draft resolution aside and prepare a different resolution. Only when the Commission acts does the resolution become binding.

Interested persons may submit comments on draft Resolution W-4885. An original of the comments, with a certificate of service, should be submitted to:

Interested persons must serve a written or electronic copy of their comments on the utility on the same date that the comments are submitted to the Division of Water and Audits. Interested persons may submit comments on or before August 30, 2011.

Comments should focus on factual, legal, or technical errors or policy issues in the draft resolution.

Persons interested in receiving comments submitted to the Division of Water and Audits may write to Terence Shia, email him at ts2@cpuc.ca.gov, or telephone him at (415) 703-2213.

/s/ RAMI S. KAHLON

Rami S. Kahlon, Director

Division of Water and Audits

Enclosures: Draft Resolution W-4885

Certificate of Service

Service List

WATER/RSK/JB5/TS2/jlj DRAFT AGENDA ITEM #10613

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

DIVISION OF WATER AND AUDITS RESOLUTION NO. W-4885

Water and Sewer Advisory Branch September 8, 2011

RESOLUTION

(RES. W-4885), SAN JOSE WATER COMPANY (SJWC). ORDER AUTHORIZING SURCHARGES TO RECOVER $5,740,078, OR AN INCREASE OF 2.62% IN ANNUAL METERED REVENUE, FOR LOST REVENUES DUE TO MANDATORY CONSERVATION.

SUMMARY

This Resolution grants SJWC the authority to recover in rates, as requested by Supplemental Advice Letter (AL) 415-A filed on July 8, 2010, the amount of $5,740,078 by adding a surcharge of $0.0944 per 100 cubic feet to the Quantity Rates in each customer's bill to be recovered over twelve months. This Supplemental AL supersedes SJWC's original filing of AL-415 filed on June 3, 2010, requesting recovery in the amount of $6,011,377 by adding a surcharge of $0.0989 per 100 cubic feet to the Quantity Rates. The increases requested are to recover lost revenues tracked in SJWC's Mandatory Conservation Revenue Adjustment Memorandum Account (MCRAMA) resulting from reduced water consumption by customers during the period of August 3, 2009 through May 1, 2010. We grant SJWC recovery of its MCRAMA.

BACKGROUND

SJWC, a Class A water utility, provides water service to approximately 217,000 residential and industrial customers in parts of Cupertino and San Jose, and in Campbell, Los Gatos, Monte Sereno, and Saratoga -- and in contiguous territory in Santa Clara County.

On May 27, 2009, SJWC filed AL 407 requesting Commission authority to establish the

MCRAMA. The purpose of the MCRAMA was to track extraordinary expenses and revenue shortfalls associated with SJWC's conservation measures implemented as a result of a Santa Clara Valley Water District (SCVWD) water shortage alert. SCVWD issued Resolution 09-25 on March 24¸ 2009, which requested a 15% mandatory conservation on total sales on all water retailers in Santa Clara County, including SJWC.

SJWC implemented conservation measures intended to achieve the goals set out by SCVWD consistent with the Commission's water conservation goals. SJWC requested authority to record in the MCRAMA the revenue impact due to these conservation measures and associated administrative and operating costs not otherwise recoverable through memorandum or balancing accounts, or any other mechanism recognized by the Commission. SJWC indicated it would seek recovery of amounts recorded in the MCRAMA in its next general rate case, or other regulatory proceeding as directed by the Commission. On August 3, 2009, SJWC filed Supplemental AL 407-D, which clarified the accounting procedures for the MCRAMA. Supplemental AL 407-D became effective on August 3, 2009.

SJWC's present rates became effective on January 1, 2010, as authorized by AL 409. 1 The ratemaking mechanism the Commission has authorized for SJWC is a "Monterey-style" Water Revenue Adjustment Mechanism (Monterey-style WRAM), per D.08-08-030. This pricing adjustment mechanism tracks the difference between revenue SJWC receives for actual metered sales through the tiered volumetric rates and the revenue SJWC would have received through the uniform, single quantity rates if those rates had been in effect.

SJWC seeks to recover the balances booked into its MCRAMA up to May 1, 2010. In AL 407-D the utility stated that the MCRAMA would remain in effect until May 1, 2010, or until SCVWD declared over the water shortage and conservation goals, whichever happened first.

On June 3, 2010, SJWC filed Advice Letter 415 requesting amortization of its MCRAMA. SJWC requested recovery in rates the amount of $6,011,377 by adding a surcharge of $0.0989 per 100 cubic feet to the Quantity Rates in each customer's bill to be recovered over twelve months.

On June 23, 2010, the Division of Ratepayer Advocates (DRA) requested and received an extension of the protest period for AL 415 to resolve some issues in the filing. DRA's proposed changes included removal from recovery of the portion of SJWC's Monterey-style WRAM Balancing Account associated with the calculation of the MCRAMA as well as gross up for Local Franchise Tax and Uncollectibles. SJWC filed Supplemental AL 415-A on July 8, 2010, resolving these issues by removing the Monterey-style

WRAM portion from the MCRAMA request and stating that it would request authorization to amortize the Monterey-style WRAM balance at a later date. In AL 415-A, SJWC amended its original request and sought to recover in rates the amount of $5,740,078 by adding a surcharge of $0.0944 per 100 cubic feet to the Quantity Rates in each customer's bill to be recovered over twelve months.

On November 29, 2010, the Division of Water and Audits (DWA) issued a letter rejecting without prejudice AL 415-A on grounds that the recovery would result in the modification of a Commission decision, i.e., D.08-08-030, and was therefore a matter inappropriate for an advice letter. In its rejection letter DWA noted that SJWC could seek a petition for modification of D.08-08-030. On December 7, 2010, SJWC requested Commission review of the DWA's rejection without prejudice of AL 415-A.

On April 29, 2011, a draft resolution was mailed to the utility and protestants for comments, which affirmed DWA's rejection of AL 415-A and denied SJWC the authority to recover in rates the amount recorded in its MCRAMA. SJWC filed comments with respect to this draft on June 15, 2011. In its comments, SJWC argued that SCVWD's conservation declaration was mandatory and that SJWC was not protected from any revenue shortfall resulting from SCVWD's conservation measures.

On July 13, 2011, the DWA withdrew from the Commission's agenda the draft resolution mailed out on April 29, 2011. Upon further review, the DWA prepared this Resolution for the Commission's consideration and approval.

NOTICE AND PROTESTS

SJWC gave public notice of its rate increase request via newspaper notice and customer bill inserts, per General Order 96-B (GO 96-B), Industry Rule 3.1 and General Rule 4.2. The public notice in the San Jose Mercury News ran on Saturday June 5, 2010. The bill inserts were provided from June 17, 2010, to August 16, 2010, as residential customers are on bi-monthly billing. The publication and bill inserts indicate the proposed increases to the applicable rate schedules.

SJWC served copies of AL 415 and AL 415-A in accordance with GO 96-B, Industry Rule 4.1 and General Rules 4.3 and 7.2. Service was provided to SJWC's Service List. Three protests were filed.

Two protests stated that although the customers continued to conserve water their bills were higher during the effective period of the MCRAMA as compared to the period before the MCRAMA was implemented. SJWC can not earn more than its authorized revenues approved by the Commission. As such, customers are not penalized for

conserving water and only pay up to the authorized level granted by the Commission. Another customer questioned excessive salaries and expenses for SJWC. SJWC's salaries and expenses are routinely audited by the DWA during general rate cases so that SJWC does not burden its customers with inflated figures for expenses.

DISCUSSION

SJWC seeks to recover the balances in the MCRAMA in the amount of $5,740,078 for reduced water consumption by customers that resulted from SJWC's implementation of mandatory water measures during the period of August 3, 2009 through May 1, 2010. We authorize this recovery for the reasons, and under the conditions, discussed below.

The Commission in D.90-08-055 and D.91-10-042 established a method for computing revenue losses resulting from mandatory and voluntary conservation programs. 2 D.91-10-042, Ordering Paragraph 3, also authorized recovery of revenue losses resulting from implementation of these types of water conservation measures contingent upon the following:

1. Approval of the utility's water management program;

2. Reduction of the memorandum account balance pursuant to the risk reduction adjustment set-forth in D.91-10-042; and

3. Offset of the memorandum account balance, where applicable, by water rationing.

SJWC is required, per Section 10620 of the Water Code, to prepare an Urban Water Management Plan (UWMP) every five years and to submit this plan to the California Department of Water Resources. Class A and B water utilities also submit their UWMPs as part of their General Rate Cases (GRCs). SJWC submitted to the Commission its 2005 UWMP for its service area as part of its 2006 GRC adopted through D.06-11-015 and is currently preparing an updated plan for 2010. The DWA reviewed SJWC's UWMP and determined that it meets the water management plant requirements established by D.90-08-055, which include: 1) clear and specific goals for reducing water usage; 2) multiple approaches for conserving water; 3) long-term water

conservation programs (including incentive-based programs); 4) cost-effectiveness of the programs; and 5) method for measuring the effectiveness of the programs.

SJWC applied the reduction of the memorandum account balance pursuant to the risk reduction adjustment of 20 basis points on equity in compliance with D.91-10-042. SJWC computed the revenue shortfall through its MCRAMA as follows:

The DWA reviewed SJWC's calculations and confirmed that it complied with the risk reduction adjustment adopted in D.90-08-055 and D.91-10-042.

The DWA therefore finds SJWC in compliance with the requirements set forth in D.90-08-055 and D.91-10-042 and recommends approval of SJWC's AL 415-A. We concur with the DWA's recommendation.

The memorandum account surcharge will result in an increase of 2.62% in annual metered revenue, while the bill for the average customer using 15 Ccf per month will increase by $1.42 per month, or approximately 2.62%. SJWC is currently earning below its authorized Rate of Return.

As stated above, the ratemaking treatment the Commission has authorized for SJWC, in SJWC's most recent conservation case, which is D.08-08-030, is a Monterey-style WRAM. Recovery under this ratemaking treatment adjusts for the difference between uniform rates and the tiered rates the Commission adopted for SJWC in D.08-08-030.3

However, recovery of the balances in the MCRAMA under the request in AL 415-A would supplement, for the period August 3, 2009 through May 1, 2010, the recovery authorized under SJWC's Monterey-style WRAM and essentially provide to SJWC the recovery the utility would have achieved if the Commission had authorized a full decoupling Water Revenue Adjustment Mechanism/Modified Cost Balancing Account (WRAM/MCBA) ratemaking mechanism for SJWC during this period in its most recent conservation case.4

While the amortization of the MCRAMA here would be consistent with the requirements set forth in D.90-08-055 and D.91-10-042 for computing revenue losses resulting from mandatory and voluntary conservation programs, it would also effectively change the ratemaking mechanism authorized in D.08-08-030. Ordinarily, the mechanism for seeking a change to a previous Commission decision is through a petition for a modification, as provided for by GO 96-B, General Rule 5.2, and this is the course the DWA had recommended in the first draft resolution with respect to this AL that was circulated on April 29, 2011.5

Under our rules in GO 96-B, we may waive the application of GO 96-B rules as we determine is appropriate considering the circumstances in specific situations. GO 96-B, General Rule 1.3, provides that "the Commission in a specific instance may authorize an exception to the operation of [GO 96-B] as appropriate." In this instance, we find that it is appropriate for SJWC to seek recovery of the balances in the MCRAMA and to waive the requirement for seeking a petition for modification of D.08-08-030 because: (1) we have previously established in D.90-08-055 and D.91-10-042 a method for computing

revenue losses resulting from mandatory and voluntary conservation programs, and SJWC's recovery request here complies with these decisions; and (2) the concern raised by DRA to AL 415 has been addressed in the Supplemental AL 415-A that is before us; thus, there is no longer any disagreement between DRA and SJWC, the two parties to the settlement agreement that gave rise to the Monterey-style WRAM that we approved in D.08-08-030. Therefore, for the reasons discussed above, we waive the requirement that SJWC seek to have the recovery issue raised here addressed through a petition for modification of D.08-08-030, and grant the recovery requested in AL 415-A.

However, because the recovery authorized here will result in a modification to a previous Commission decision, i.e., D.08-08-030, the parties to D.08-08-030 must be provided notice and an opportunity to be heard on this issue as is required by Public Utilities Code section 1708.6 Accordingly, notice of this draft Resolution is being provided to the parties to D.08-08-030, as provided for in the Comments discussion below.

COMMENTS

Public Utilities Code Section 311(g) (1) generally requires that that resolutions must be served on all parties and be subject to at least 30 days public review and comment prior to a vote of the Commission. Accordingly, on August 9, 2011 the draft Resolution was mailed for 30-day public review and comment to the utility and protestants, and to the parties on the service list for D.08-08-030. ________ comments were received.

FINDINGS AND CONCLUSIONS

1. On June 3, 2010, San Jose Water Company filed Advice Letter 415 to request amortization of its Mandatory Conservation Revenue Adjustment Memorandum Account. San Jose Water Company requested to recover in rates the amount of $6,011,377 by adding a surcharge of $0.0989 per 100 cubic feet to the Quantity Rates in each customer's bill to be recovered over twelve months.

2. On June 23, 2010, the Division of Ratepayer Advocates requested and received an extension of the protest period for Advice Letter 415 to resolve some of its proposed

3. San Jose Water Company filed Supplemental Advice Letter 415-A on July 8, 2010, resolving these issues and stating that it would request authorization to amortize the Monterey-style WRAM balance at a later date. In Advice Letter 415-A, San Jose Water Company amended its original request and sought to recover in rates the amount of $5,740,078 by adding a surcharge of $0.0944 per 100 cubic feet to the Quantity Rates in each customer's bill to be recovered over twelve months.

4. On November 29, 2010, the Division of Water and Audits issued a letter rejecting without prejudice Advice Letter 415-A on grounds that the recovery was a matter inappropriate for an advice letter and that San Jose Water Company should file a petition for modification of Decision 08-08-030.

5. San Jose Water Company filed a timely request for Commission review of the Division of Water and Audits' disposition of Advice Letter 415-A on December 7, 2010.

6. Santa Clara Valley Water District issued its initial request for a 15 percent mandatory water conservation of all water retailers in Santa Clara County in Resolution 09-25 issued March 24, 2009.

7. San Jose Water Company is a water retailer in Santa Clara County.

8. The rate-making mechanism that the Commission has authorized for San Jose Water Company is a "Monterey-style" Water Revenue Adjustment Mechanism; the Commission authorized this rate-making treatment in D.08-08-030.

9. The Commission Decisions 90-08-055 and 91-10-042 established a method for computing revenue losses resulting from mandatory and voluntary conservation programs.

10. Commission Decision 91-10-042, Ordering Paragraph 3, authorized recovery of revenue losses resulting from implementation of mandatory and voluntary water conservation measures contingent upon the following:

11. The Division of Water and Audits finds that San Jose Water Company's 2005 Urban Water Management Plan meets the water management program requirement established by Decision 91-10-042, Ordering Paragraph 3.

12. The Division of Water and Audits reviewed San Jose Water Company's revenue losses calculations and finds that they are in compliance with the risk reduction adjustment adopted in Decisions 90-08-055 and 91-10-042, including the contingencies established by Ordering Paragraph 3.

13. The Division of Water and Audits recommends approval of San Jose Water Company's Advice Letter 415-A.

14. Recovery of the balance in the Mandatory Conservation Revenue Adjustment Memorandum Account would supplement, for the period August 3, 2009 through May 1, 2010, the recovery authorized under San Jose Water Company's Monterey-style Water Revenue Adjustment Mechanism and essentially provide to SJWC the recovery the utility would have achieved if the Commission had authorized a full decoupling Water Revenue Adjustment Mechanism/Modified Cost Balancing Account (WRAM/MCBA) ratemaking mechanism for SJWC during this period in its most recent conservation rate case.

15. While the amortization of the Mandatory Conservation Revenue Adjustment Memorandum Account here would be consistent with the requirements set forth in D.90-08-055 and D.91-10-042 for computing revenue losses resulting from mandatory and voluntary conservation programs, it would also effectively change the rate-making mechanism authorized in D.08-08-030.

16. Ordinarily, the mechanism for seeking a change to a previous Commission decision is through a petition for modification, as provided for by General Order 96-B, General Rule 5.2, and this is the course the Division of Water & Audits had recommended in the first draft resolution with respect to this Advice Letter that was circulated on April 29, 2011.

17. In this instance, it is appropriate for San Jose Water Company to seek recovery of the balances in the Mandatory Conservation Revenue Adjustment Memorandum Account and for the Commission to waive the requirement for seeking a petition for modification of D.08-08-030 because:

18. This draft Resolution was circulated for public comment pursuant to Public Utilities Code Section 311(g) (1).

19. San Jose Water Company filed comments on August ____, 2011.

20. The surcharge of $0.0944 per 100 cubic feet added to the quantity rates over twelve months herein would allow San Jose Water Company to recover in rates the $5,740,078 in lost revenues.

21. San Jose Water Company should be permitted to transfer $5,740,078 from its Mandatory Conservation Revenue Adjustment Memorandum Account to a balancing account for recovery.

22. Consistent with Public Utilities Code Section 792.5, San Jose Water Company shall track revenues collected under the surcharges authorized in this Resolution in a balancing account and account for any over or under collection in its next General Rate Case.

23. It is consistent with Standard Practice U-27-W for San Jose Water Company to assess a 12-month surcharge for recovery.

24. The following tariff schedules should be approved in a Tier 1 Advice Letter filing as attached to this Resolution: 1) Schedule No. 1, General Metered Service; 2) Schedule No. 1B, General Metered Service with Automatic Fire Sprinkler System; and 3) Schedule No. 1C, General Metered Service for Mountain District.

THEREFORE IT IS ORDERED THAT:

1. San Jose Water Company is permitted to transfer $5,740,078 from its Mandatory Conservation Revenue Adjustment Memorandum Account to a balancing account for recovery. San Jose Water Company is authorized to earn interest on the balance in this balancing account at the 90-day commercial paper rate.

2. San Jose Water Company is authorized to implement a surcharge of $0.0944 per 100 cubic feet added to the quantity rates over twelve months to recover in rates the $5,740,078 in lost revenues.

3. San Jose Water Company is authorized to file a Tier 1 Advice Letter to make effective the following tariff schedules attached to this Resolution, and to cancel the corresponding tariffs for the presently effective rate schedules:

4. This resolution is effective today.

I certify that the foregoing resolution was duly introduced, passed, and adopted at a conference of the Public Utilities Commission of the State of California held on September 8, 2011; the following Commissioners voting favorably thereon:

CERTIFICATE OF SERVICE

I certify that I have by mail this day served a true copy of Draft Resolution W-4885 on all parties in this filing or their attorneys as shown on the attached list.

Dated August 9, 2011, at San Francisco, California.

SERVICE LIST

DRAFT RESOLUTION W-4885

Palle Jensen

Director - Regulatory Affairs

San Jose Water Company

110 West Taylor Street

San Jose, CA 95196

palle_jensen@sjwater.com

 

          Mr. and Mrs. Jeff Lou

1230 Clark Way

San Jose, CA 95125

jjflash73@sbcglobal.net

 

    Masoud Akbarzadeh

    3670 Madrid Street

    San Jose, CA. 95132

 

    Charlie Harak

    National Consumer Law Center

    7 Winthrop Square, 4th Floor

    Boston, MA. 02110-1006

    charak@nclc.org

 

    Olivia B. Wein

    National Consumer Law Center

    1001 Connecticut Ave., NW., Ste 510

    Washington, DC 20036

    owein@nclcdc.org

   
   

    Leigh K. Jordan

    Apple Valley Ranchos Water Company

    PO BOX 7002

    Downey, CA. 90241

    leigh@parkwater.com

   
   
 

    Keith Switzer

    Golden State Water Company

    630 E. Foothill Blvd

    San Dimas, CA. 91773-9016

    kswitzer@gswater.com

 

    Ronald Moore

    Golden State Water Company

    630 E. Foothill Blvd

    San Dimas, CA. 91773-9016

    rkmoore@gswater.com

 

    Kendall H. Macvey, Esq.

    Best, Best & Krieger, LLP

    3750 University Avenue, Suite 300

    Riverside, CA. 92501-1028

    kendall.macVey@bbklaw.com

 

    John K. Hawks

    California Water Association

    601 Van Ness Ave, Ste. 2047

    San Francisco, CA. 94102-3200

    jhawks_cwa@comcast.net

 

    Geraldine Kim

    CA Public Utilities Commission

    505 Van Ness Ave

    San Francisco, CA. 94102-3214

    vo2@cpuc.ca.gov

 

    Marcelo Poirier

    CA Public Utilities Commission

    505 Van Ness Ave

    San Francisco, CA. 94102-3214

    mpo@cpuc.ca.gov

    Monica L. McCrary

    CA Public Utilities Commission

    505 Van Ness Ave

    San Francisco, CA. 94102-3214

    mlm@cpuc.ca.gov

 

    Christine Mailloux

    The Utility Reform Network

    115 Sansome Street, Suite 900

    San Francisco, CA. 94104

    cmailloux@turn.org

 

    Marcel Hawiger

    The Utility Reform Network

    115 Sansome Street, Suite 900

    San Francisco, CA. 94104

    marcel@turn.org

    Nina Suetake

    The Utility Reform Network

    115 Sansome Street, Suite 900

    San Francisco, CA. 94104

    nsuetake@turn.org

 

    Lenard G. Weiss

    Manatt, Phelps & Phillips, LLP

    One Embarcadero Center, 30th Floor

    San Francisco, CA 94111

    lweiss@manatt.com

 

    Martin A. Mattes

    Nossaman, LLP

    50 California Street, 34th Floor

    San Francisco, CA. 94111-4799

    mmattes@nossaman.com

   

    Patricica A. Schmiege

    Law Office of Patricia A. Schmiege

    705 Mission Avenue, Suite 200

    San Rafael, CA. 94901

    pschmiege@schmiegelaw.com

    Francis S. Ferraro

    California Water Service Company

    1720 North First Street

    San Jose, CA. 95112

    sferraro@calwater.com

 

    Lynne P. McGhee

    California Water Service Company

    1720 North First Street

    San Jose, CA. 95112

    lmcghee@calwater.com

 
   

    Nicole Blake

    Consumer Federation of California

    1107 9th Street, Ste 625

    Sacramento, CA 95814

    blake@consumercal.org

   

    Lindsey Fransen

    CPUC

    505 Van Ness Ave

    San Francisco, CA. 94102-3214

    lfr@cpuc.ca.gov

         

1 The utility filed AL 409 pursuant to Ordering Paragraph #5 of D.09-11-032, which authorized SJWC to file a Tier 1 AL requesting an escalation adjustment for 2011 to be calculated in conformance with the Rate Case Plan adopted in D.07-05-062 (Appendix A).

2 These decisions were issues in the Commission's Order Instituting Investigation (I.) 89-03-005, Measures to Mitigate the Effect of Drought on Regulated Water Utilities, Their Customers, and the General Public.

3 D.08-08-030 implemented two-tiered increasing block rates for residential customers and the Monterey-style WRAM that will track the difference between revenue SJWC receives for actual metered sales through the tiered volumetric rates and the revenue SJWC would have received through the uniform, single quantity rates if they had been in effect.

4 Both the MCRAMA and the balancing accounts under the full WRAM/MCBA account for lost revenues in a similar manner. Both mechanisms take the net difference between adopted water sales revenue and actual water sales revenue and compare this difference to the difference between adopted variable expenses and actual recorded variable expenses to derive a net balance. In addition, this net balance in the recovery authorized here is reduced for SJWC by the equivalent of a 20 basis point reduction on its return on equity, as discussed above.

5 As relevant here, GO 96-B, General Rule 5.2, states that a utility must file a petition for modification if the utility requests modification of a decision issued in a formal proceeding or otherwise seeks relief that the Commission can grant only after holding an evidentiary hearing, or by decision rendered in a formal proceeding.

6 Public Utilities Code section 1708 states: "The commission may at any time, upon notice to the parties, and with the opportunity to be heard as provided in the case of complaints, rescind, alter, or amend any order or decision made by it. Any order rescinding, altering, or amending a prior order or decision shall, when served upon the parties, have the same effect as an original order or decision."

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